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Financial Ombudsman consults on budget

09 January 2004

The Financial Ombudsman Service today published its proposed budget plans for the next financial year (April 2004 to March 2005).

The budget shows that the costs of handling complaints at the ombudsman have continued to fall. The average cost of resolving a dispute - the ombudsman service's "unit cost" - has dropped from £753 three years ago to £507 (the budget figure for 2004/05). Taking a new approach to the case fee system that helps meet these costs, the ombudsman proposes not to charge financial firms case fees for the first two complaints referred to the ombudsman service each year. This will particularly benefit the large majority of firms whose customers only rarely refer complaints to the ombudsman.

The reduction in the cost of handling complaints results from continued productivity improvements and the fact that the fixed costs of the ombudsman service are spread over the much larger number of complaints that it now handles. By the end of this financial year (March 2004) the ombudsman service expects to have resolved and closed around 80,000 complaints (around half relating to mortgage endowments). This total is a 40% increase on the number of complaints resolved last year. Next year (2004/05) it expects to resolve 88,000 disputes - the highest number ever.

The ombudsman service is particularly interested in feedback on its planning assumptions for the level of complaints it should expect to receive next year. Comments are also welcome on all other aspects of the plan & budget.

Printed hard copies of the plan & budget will be available shortly.